5 ms·

The next-to-last sentence caught my eye: "The automaker recently announced that import tariffs and transportation costs will push the price of its Model S in C

The next-to-last sentence caught my eye: "The automaker recently announced that import tariffs and transportation costs will push the price of its Model S in China to $121,000, or roughly 50 percent more than the plug-in sedan costs in the U.S." We'll never hear it mentioned in American news, but we had import tariffs up until the 80s when we adopted supply-side economics as our ideology. We wonder why our manufacturing has all gone overseas, well there is actually a very simple explanation. Other countries still protect their manufacturing with tariffs while we don't. American workers can't compete with countries that have no minimum wage, no environmental protections, and few (if any) anti-corruption laws that are actually enforced. In fact if you go back far enough (and this might appeal to skeptics with a libertarian slant) tariffs were a primary form of taxation before income tax. I wish we could at least have an open debate about bringing some of them back, with projections and an honest analysis of what it would do for American industry. But with corporations seeking ever-lower costs by design, and politicians ramming through the TPP at top speed, I don't see it happening any time soon.

cashmonkey85 13y ago
I hope no one else thinks this is a good idea. The problem isn't corporate control of government stopped this but the fact it would do so much damage to the American economy and maybe start a trade war.
- adventured 13y ago
  It would absolutely start a trade war, that America would lose very quickly. The incorrect assumption here is that America has more to gain than lose from doing that, when such couldn't be further from the truth. America is temporarily riding on a fake consumer driven economy supported by the cheapest debt in world history and cheap imports from other countries like China; emphasis on temporary. Our ability to rapidly scale up domestic manufacturing is non-existent, so in the midst of a serious trade war, nearly every single thing Americans buy would skyrocket in price and decimate the already tapped-out consumer, leading to millions of laid-off service sector workers. This is going to happen anyway, as China and others can increasingly afford their own cheap goods and don't need to export them to us, and the days of cheap debt are coming to an end very soon. It would just accelerate the erosion of what's left of America's economic fantasy. And none of this even touches on the dumping of US Govt. junk paper by a country like China, which would collapse the economy instantly into either an Argentina / Venezuela style inflation nightmare (as the Fed has to print ever larger sums to keep the government solvent), or a Greece slash & burn scenario.
  - daughart 13y ago
    "Why hasn’t China “nuked” us? If Beijing sold Treasury securities in massive quantities, it would cause a panic, but the world’s deep markets would quickly adjust. The Chinese, we should remember, would get back dollars. Because they are doing this to undermine America, they would have to either buy hard assets or convert the proceeds into other currencies. As a practical matter, China’s deficit-plagued central government needs the income so most of the funds would go into interest-bearing instruments denominated in euros, pounds, francs, and yen. The euro, pound, franc, and yen would obviously soar in value, so Brussels, London, Bern, and Tokyo would have to go out into the markets to rebalance their currencies. The only practical way to rebalance would be to buy . . . dollars. So why don’t the Chinese go nuclear? They know that in a short period calm would return to the markets, America’s debt would end up held by its friends, and they would be stuck with a wide variety of assets their managers had shunned in the first place." G.G. Chang, Forbes OP/ED 10/06/2013
adamkittelson 13y ago
It's worth noting that despite the price increase compared to what Tesla charges in the United States they will, according to Tesla, actually be charging significantly less than other car manufacturers are charging for comparable vehicles in China. http://www.teslamotors.com/blog/fair-price http://www.teslamotors.com/blog/fair-price
paganel 13y ago
I'm not an American and I'm what most people would call a "libertarian", but if you really do believe in "protection tariffs" then ask yourself if you're prepared to pay ~$1,800 for a PS4, for example. (http://www.destructoid.com/playstation-4-will-cost-1-850-in-brazil-263741.phtml http://www.destructoid.com/playstation-4-will-cost-1-850-in-...)
- rayiner 13y ago
  If it would bring jobs back to the Delaware valley, then in a heartbeat.
- fiatmoney 13y ago
  The entire point is that the high cost makes domestic production more attractive, because you can offer a lower price than the foreign-produced, tariffed variety.
  - ihsw 13y ago
    And when domestic production just doesn't happen, what then? Will you allow your population to languish in poverty while prices are high due to an artificial floor? PS4s are a luxury, but when we apply the same logic to necessities then that argument falls on its face fairly quickly. Tariffs are also susceptible to political wrangling, where taxes are levied selectively.
    - dandelany 13y ago
      We have the resources and labor force for domestic production, and there is plenty of money to be made. Nature abhors a vacuum. It would happen. > PS4s are a luxury, but when we apply the same logic to necessities then that argument falls on its face fairly quickly. So let's only apply it to non-necessities. We already have higher taxes on some luxuries, what would happen if we implemented them as import tariffs rather than sales tax?
    - fiatmoney 13y ago
      "Necessities" are irrelevant. If you are worried about, eg, the ability of the poor to afford food, and have a simultaneous goal of promoting domestic industry, the optimal policy is income subsidies + the tariff you would have imposed anyway. In fact, you can use the tariff to finance the income subsidies, and it will work at some tariff level as long as the right proportion of the market for that good is not receiving the subsidies. Further, the industry growth prompted by the tariff is likely to disproportionately help those the income subsidy would be targeting. You'll notice the market for unskilled labor in the US is not exactly thriving. The political economy argument is more compelling, but in practice "free trade" ends up being anything but. International trade agreements usually take the form of market access conditioned on the kinds of regulation friendliest to the most politically influential (~largest) actors. This is how you get, eg, "free trade" agreements that massively strengthen copyright regimes, to the benefit of "original" content producers and the detriment of content remixers and consumers.
rayiner 13y ago
I believe in free trade in principle, but I'm unwilling to sacrifice environmental and labor protection on the alter of neoclassical economics. Our trade policy should have strong barriers to entry. If you adopt our model: liberal democracy, environmental and labor protection antitrust and corruption enforcement, then we can have free trade. Otherwise, you don't get to participate.
yetanotherphd 13y ago
There was honest debate, your side just happened to lose. Supply-side economics is a misnomer. Classical economics would be a much more accurate term. It is true that American workers cannot compete with lower costs overseas (though I think the lower costs have more to do with the fact that the US has more alternative means of employment and therefore higher wages). However this is no issue. As a friend of mine always likes to say, trade is like technology: you can think of other countries like a machine where you put in one kind of good (exports) and get back another (imports). So why would you want to impose a special tax on this machine? Economic theory suggests that to do so would be inefficient. The only valid reason for protectionism is strategic: e.g. having the ability to make things for yourself in case other countries cut off supply. The US is by far the world leader in military technology so I don't think this is an issue.
moca 13y ago
Tariffs is a meaningful way to adjust trade balance. Whether it works in specific situation is up to debate. This is similar to how U.S. uses income tax cut/raise to adjust economy growth and deficit, and the result is hard to predict. As far as I can see, Chinese government has been pretty successful using all kinds of economic tools to manage its growth over past 30 years. Import tariffs is one of the tools. I think it would be fair for US to have some tariffs against China to balance the trade. The real problem is such policy has not political appealing at this time. If raising tariffs help future US businesses to compete against China, since such businesses don't exist today, there is no immediate political or economical return, so it is unlikely to happen.

cashmonkey85 13y ago

I hope no one else thinks this is a good idea. The problem isn't corporate control of government stopped this but the fact it would do so much damage to the American economy and maybe start a trade war.

adventured 13y ago
It would absolutely start a trade war, that America would lose very quickly. The incorrect assumption here is that America has more to gain than lose from doing that, when such couldn't be further from the truth. America is temporarily riding on a fake consumer driven economy supported by the cheapest debt in world history and cheap imports from other countries like China; emphasis on temporary. Our ability to rapidly scale up domestic manufacturing is non-existent, so in the midst of a serious trade war, nearly every single thing Americans buy would skyrocket in price and decimate the already tapped-out consumer, leading to millions of laid-off service sector workers. This is going to happen anyway, as China and others can increasingly afford their own cheap goods and don't need to export them to us, and the days of cheap debt are coming to an end very soon. It would just accelerate the erosion of what's left of America's economic fantasy. And none of this even touches on the dumping of US Govt. junk paper by a country like China, which would collapse the economy instantly into either an Argentina / Venezuela style inflation nightmare (as the Fed has to print ever larger sums to keep the government solvent), or a Greece slash & burn scenario.
- daughart 13y ago
  "Why hasn’t China “nuked” us? If Beijing sold Treasury securities in massive quantities, it would cause a panic, but the world’s deep markets would quickly adjust. The Chinese, we should remember, would get back dollars. Because they are doing this to undermine America, they would have to either buy hard assets or convert the proceeds into other currencies. As a practical matter, China’s deficit-plagued central government needs the income so most of the funds would go into interest-bearing instruments denominated in euros, pounds, francs, and yen. The euro, pound, franc, and yen would obviously soar in value, so Brussels, London, Bern, and Tokyo would have to go out into the markets to rebalance their currencies. The only practical way to rebalance would be to buy . . . dollars. So why don’t the Chinese go nuclear? They know that in a short period calm would return to the markets, America’s debt would end up held by its friends, and they would be stuck with a wide variety of assets their managers had shunned in the first place." G.G. Chang, Forbes OP/ED 10/06/2013

adamkittelson 13y ago

It's worth noting that despite the price increase compared to what Tesla charges in the United States they will, according to Tesla, actually be charging significantly less than other car manufacturers are charging for comparable vehicles in China. http://www.teslamotors.com/blog/fair-price http://www.teslamotors.com/blog/fair-price

paganel 13y ago

I'm not an American and I'm what most people would call a "libertarian", but if you really do believe in "protection tariffs" then ask yourself if you're prepared to pay ~$1,800 for a PS4, for example. (http://www.destructoid.com/playstation-4-will-cost-1-850-in-brazil-263741.phtml http://www.destructoid.com/playstation-4-will-cost-1-850-in-...)

rayiner 13y ago
If it would bring jobs back to the Delaware valley, then in a heartbeat.
fiatmoney 13y ago
The entire point is that the high cost makes domestic production more attractive, because you can offer a lower price than the foreign-produced, tariffed variety.
- ihsw 13y ago
  And when domestic production just doesn't happen, what then? Will you allow your population to languish in poverty while prices are high due to an artificial floor? PS4s are a luxury, but when we apply the same logic to necessities then that argument falls on its face fairly quickly. Tariffs are also susceptible to political wrangling, where taxes are levied selectively.
  - dandelany 13y ago
    We have the resources and labor force for domestic production, and there is plenty of money to be made. Nature abhors a vacuum. It would happen. > PS4s are a luxury, but when we apply the same logic to necessities then that argument falls on its face fairly quickly. So let's only apply it to non-necessities. We already have higher taxes on some luxuries, what would happen if we implemented them as import tariffs rather than sales tax?
  - fiatmoney 13y ago
    "Necessities" are irrelevant. If you are worried about, eg, the ability of the poor to afford food, and have a simultaneous goal of promoting domestic industry, the optimal policy is income subsidies + the tariff you would have imposed anyway. In fact, you can use the tariff to finance the income subsidies, and it will work at some tariff level as long as the right proportion of the market for that good is not receiving the subsidies. Further, the industry growth prompted by the tariff is likely to disproportionately help those the income subsidy would be targeting. You'll notice the market for unskilled labor in the US is not exactly thriving. The political economy argument is more compelling, but in practice "free trade" ends up being anything but. International trade agreements usually take the form of market access conditioned on the kinds of regulation friendliest to the most politically influential (~largest) actors. This is how you get, eg, "free trade" agreements that massively strengthen copyright regimes, to the benefit of "original" content producers and the detriment of content remixers and consumers.

rayiner 13y ago

I believe in free trade in principle, but I'm unwilling to sacrifice environmental and labor protection on the alter of neoclassical economics. Our trade policy should have strong barriers to entry. If you adopt our model: liberal democracy, environmental and labor protection antitrust and corruption enforcement, then we can have free trade. Otherwise, you don't get to participate.

yetanotherphd 13y ago

There was honest debate, your side just happened to lose. Supply-side economics is a misnomer. Classical economics would be a much more accurate term. It is true that American workers cannot compete with lower costs overseas (though I think the lower costs have more to do with the fact that the US has more alternative means of employment and therefore higher wages). However this is no issue. As a friend of mine always likes to say, trade is like technology: you can think of other countries like a machine where you put in one kind of good (exports) and get back another (imports). So why would you want to impose a special tax on this machine? Economic theory suggests that to do so would be inefficient. The only valid reason for protectionism is strategic: e.g. having the ability to make things for yourself in case other countries cut off supply. The US is by far the world leader in military technology so I don't think this is an issue.

moca 13y ago

Tariffs is a meaningful way to adjust trade balance. Whether it works in specific situation is up to debate. This is similar to how U.S. uses income tax cut/raise to adjust economy growth and deficit, and the result is hard to predict. As far as I can see, Chinese government has been pretty successful using all kinds of economic tools to manage its growth over past 30 years. Import tariffs is one of the tools. I think it would be fair for US to have some tariffs against China to balance the trade. The real problem is such policy has not political appealing at this time. If raising tariffs help future US businesses to compete against China, since such businesses don't exist today, there is no immediate political or economical return, so it is unlikely to happen.